A
SPAC is a shell company that raises money via an initial public
offering, which is then used to buy a private firm. The company
can then become publicly listed via the merger, providing an
alternative to a traditional IPO.
Global SPAC volumes hit $286 billion in the first four months of
this year, versus $163 billion in 2020, based on Refinitiv data.
Anat Guetta, head of the Israel Securities Authority, said the
requirements in Israel aim to protect investors without
dampening their appetite for SPACs as an alternative fundraising
route for local companies.
They include setting a two-year deadline for the SPAC to find a
company to buy, so that investors who put money into the vehicle
are not left stranded.
The rules also include a 70% minimum participation by
institutional investors, and a requirement that SPAC sponsors
invest at least 40 million shekels ($12 million) themselves so
they have "skin in the game."
"It will likely take time for our market to become more
sophisticated and reach a place where deals are of a similar
profile to Wall Street, and we didn't want to expose our
investors to any harm that without a doubt would be inherent in
the learning process," Guetta told Reuters.
"So we decided to open the market with minimum requirements that
are relatively high," she said.
The rules also state that funds raised must be at least 400
million shekels and investors who later vote against acquiring
the target company get their money back.
There have already been a number of SPAC requests in Tel Aviv,
though Guetta did not provide further details.
The potential attraction of Tel Aviv for these deals stems from
its big high-tech sector that has been the source of an
unprecedented number of IPOs in 2020 and 2021.
"The tendency (for SPACs) has mostly been to go for technology
companies, and I estimate the trend will be similar in Israel,"
she said.
Of 44 IPOs in Tel Aviv so far this year, 28 have been tech
companies. That total is up from 19 out of a total of 27 in
2020.
($1 = 3.2560 shekels)
(Editing by Jane Merriman)
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